ALTERNATIVE DISPUTE RESOLUTION Presentation by: CPA Caroline Ngʻangʻa, MCIArb

1. ALTERNATIVE DISPUTE RESOLUTION Presentation by: CPA Caroline Ngʻangʻa, MCIArb Arbitrator and Accredited Mediator Financial Reporting and Management Conference for County Governments Uphold public interest

2. Areas of Conflict

3. What are the areas of Conflicts: • With other stakeholders: Suppliers, Employees, Intercounty conflicts, • - With the National Government • What does the law/ Constitution say about conflict resolution within the Context of County Governments Conflicts within the Context of County Governments

4. The constitution states that in any dispute between the two levels of government, reasonable efforts shall be made to settle the dispute by negotiation, mediation and arbitration. In terms of legislation, the Intergovernmental Relations Act establishes a framework for consultation and co-operation between the national and county governments and amongst county governments. It establishes mechanisms for the resolution of intergovernmental disputes pursuant to Articles 6 and 189 of the Constitution. The Constitution and Dispute Resolution in Counties

5. ADR refers to the process of resolving disputes other than litigation. This Includes use of : Arbitration Negotiation Mediation Conciliation Adjudication Expert Determination Introduction & Forms of ADR

6. Basis For ADR • Constitutional provision, Article 159 entrenches ADR as part of Kenya’s dispute resolution mechanism. • The Civil Procedure Act Section 59 (court Annexed mediation) • Article 33 of United Nations Charter. Introduction & Forms of ADR

7. It is subject to statutory controls:Arbitration Act 1995 &The Civil Procedure Act. • It arises where a private tribunal or an individual is appointed to determine a dispute and render a final binding decision called an award enforced by courts.It is adversarial and in many ways resembles litigation. Arbitration

8. Must be agreed to in writing by the parties either in the dispute resolution clause or as a seperate agreement. • Enforcement of International Arbitral Awards: Signitories to the NewYork Convention. • UNICITRAL model of Arbitration law: Brief Highlight Arbitration Cont.

9. Enforcement of International Arbitration awards is available in all countries that are signatories to New York Convention • New York Convention” means the Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted by the United Nations General Assembly in New York on the 10th June, 1958, and acceded to by Kenya on the 10th February, 1989, with a reciprocity reservation. Enforcement of Arbitration Awards

10. Domestic Awards are enforced by the courts upon application by the parties according to the Arbitration Act 1995 section 36. • Arbitration Awards can be set aside by the high court upon application by the parties and as per the provisions of the Act. Enforcement of Arbitration Awards

11. Itʻs any form of communication between two or more people for purposes of arriving at a mutually agreeable solution to a dispute. • The disputants may represent themselves or may be represented by agents.Thedisputants have control of the negotiating process. • The objectiveis to arrive at a “win- win” solution Negotiation

12. Itʻs a non binding process in which an impartial party ( Mediator) facilitates negotiation process between the disputants. • The mediator has no decision making powers and the parties maintain control over the process and the substantive outcome of the mediation process. • The parties are assisted to voluntarily reach their own mutually acceptable settlement Mediation

13. Conciliation is not universally defined mechanism. • Locally it is described as a mechanism used to test the possibility of two disputing parties making up and assuming prior cordial relationship. • The Commission for conciliation, mediation & arbitration of S. Africa defines it process where a ccommissioner meets with parties and explores ways to settle the dispute by agreement Conciliation

14. The 3rd party, a Conciliator separately discusses the dispute with each party , then prepares a solution based on what he considers to be just & optimal compromise. • Conciliation is used to restore the parties to the pre- dispute relationship after which other ADR technique may be applied. • The conciliator is the Architect & designer of the solution. Conciliation Cont.

15. Itʻs defined as a dispute settlement mechanism where an impartial 3rd party ( Adjudicator) makes a fair, rapid and inexpensive decision on adispute arising from a construction project. • Itʻs thus limited and appropriate to unique needs in construction industry, which usually involves Engineering and civil contracts. • Adjudicatorʻs decisionis a binding order unless the matter is referred to Arbitration or litigation. Adjudication

16. This is a process where Parties submit issues and dispute to an expert knowledgeable in a particular field of dispute for determination. • The expert evaluates the dispute & makes a decision based on his expertise, e.g an accountant determining the net profit of a business. • It is also used in the construction industry to determine issues of a specific technical nature. Expert Determination

17. It is private • It is fast. • Preserves business relations • Is a factor in determining ease of doing business in a jurisdiction • Promotes International trade. • It is cost effective*** • Helps reduce backlog in the court systems Benefits of ADR

18. Word from the Expert

19. Activating ADR in a Dispute Any of the parties in a dispute can kickstart the dispute resolution process by notifying the other party/parties of their desire to do so as per the dispute resolution clause in the contract. This makes the Dispute resolution clause one of the most important aspects of a contract negotiotion. It should be precise and also capture the real desire of the parties.

20. Dispute Resolution Clause A dispute resolution clause is an agreement within a contract which sets out the mechanism for the resolution of disputes between the contractual parties • Refer to notes & Case Study • https://www.fenwickelliott.com/research-insight/adjudication-case-notes/ericsson-ab-v-eads-defence-and-security-systems-limited

21. Dispute Resolution Clause DRC should be clear, concise, and workable Courts and tribunals are keen to uphold the prior agreement of the parties and therefore parties must make it easy for this to happen; Important Aspects: • Methods to be taken and in which order • Appointment of the dispute resolver, method and appointing authority • Notice period

22. Dispute Resolution Clause - The cost of dispute resolution: Whose cost is it? • The Applicable law • Tied methods clearly stating what period is spent on each before escalating to the next usually starting with the most informal with litigation and/or arbitration being the last result. • Must clearly state the optional and compulsory clauses. Careful with words like ’may’ and ‘shall’

23. Word from the Experts “When two wise men are blaming one another, then time has come for you to be the third one.” ― Toba Beta, Master of Stupidity

24. ADR IN KENYA

25. ADR IN KENYA Cont.

26. ADR IN KENYA Cont. • Practice of ADR as a Proffession ADR in Kenya can be practised through: • Direct Appointment by the parties • Chartered Institute of Arbitrators • Court Annexed Mediation • Nairobi Centre for International Arbitration Other centres in the region: Kigali, Cairo Around the world: Dubai,London,KL,Beijin,

27. Arbitration: Accountants are sought after in the Arbitration proffession due to pivotal place of their technical knowledge in business. Accountants can train to be Arbitrators. It is a very lucrative proffession especially in the international trade arena. Appointment directly by parties or through the various institutes panels as guided by the Dispute resolution clause Oppourtunities for Accountants in ADR

28. Practice in Mediation: Court Annexed program, Chartered Institute, NCIA and other panels. Appointment either directly by parties or as per the Dispute resolution clause. • Court Annexed Mediation has so far released about kes500M of the kes5B held in commercial disputes back to the economy Less than 200 mediators listed on the MAC list as at last year. Oppourtunities for Accountants in ADR Cont.

29. Expert Determination: This is especially for those who are in active practice of the proffession. One can put themselves out there as capable of providing expert determination on matters touching on accounting. • Training, examination and lecturing on this new frontier once you have mastered the ropes. Oppourtunities for Accountants in ADR Cont.

30. Sensitization of the Public on ADR. • Drafting clear Dispute Resolution clauses for contracts in their organizations • Proffessionals from an Accounting and/or Finance background have a higher chance of making it to CEO positions according to research hence need the knowledge while contracting and in actual dispute resolution What more can Accountants Do?